IOM3 responds to Autumn Budget 2024
Rachel Reeves has today (30 October) outlined the UK Government’s plans for taxes, investment and spending.
In the first Labour budget in over 14 years, Chancellor of the Exchequer Rachel Reeves reiterated the UK Government’s commitment to a modern Industrial Strategy and outlined plans for £100bln of investment.
IOM3 CEO Dr Colin Church FIMMM CEnv said, ‘Although the Chancellor’s speech was brief on clean energy and the upcoming industrial strategy, it is good to see these areas confirmed as central priorities for government. Our members will play an important role in developing and implementing the Strategy and IOM3 will continue to help inform and shape its development.
There were a number of encouraging announcements in the budget today; from the funding for companies supplying critical minerals, to the protection of research and development funding, and the overarching aim for greater stability and clear policy direction. As always, the devil will be in the detail and its delivery.’
Key points and a more detailed digest of matters relevant to IOM3 members’ work announced in the budget can be found below.
Key points:
- National Wealth Fund to catalyse over £70 bln of private investment in clean energy and growth industries.
- Support for hydrogen and Carbon Capture, Usage and Storage.
- Funding to support a modern Industrial Strategy and its development.
- £350 mln to support decarbonisation of energy intensive industries.
- Financial support for companies supplying critical minerals to UK exporters in high-growth sectors.
- Research, development and innovation funding including a new multi-year R&D Missions Programme.
- Businesses will be permitted to use a mass balance approach to evidence recycled content in chemically recycled plastic for the Plastic Packaging Tax.
- Support for teacher recruitment and investment to transform the Apprenticeship Levy into a Growth and Skills Levy.
Matters relevant to IOM3 members’ work announced in the budget include:
Energy
- Establishing Great British Energy (GBE) with £125 mln in 2025-26.
- Creating the National Wealth Fund to catalyse over £70 bln of private investment in the UK’s clean energy and growth industries.
- £3.9 bln of funding in 2025-26 for Carbon Capture, Usage and Storage Track-1 projects.
- Leveraging £8 bln of private investment in Carbon Capture, Usage and Storage infrastructure.
- Support for the first round of electrolytic hydrogen production contracts.
- £134 mln to support the delivery of port infrastructure to facilitate floating offshore wind.
- Changes to the Energy Profits Levy (EPL) including increasing its rate from 35% to 38%, removing the 29% investment allowance, and extending the levy until 31 March 2030.
- 100% first-year allowances in the EPL will remain.
- Government will consult in early 2025 on how the oil and gas tax regime should respond to price shocks once the EPL ends in 2030.
- Consultation published on new environmental guidance for assessing end use emissions related to oil and gas projects.
- £2.7 bln of funding to continue Sizewell C’s development through 2025-26.
- Public Sector Decarbonisation Scheme, with over £1 bln of funding over three years to deliver local energy schemes.
- £163 mln to continue the Industrial Energy Transformation Fund over 2025-26 to 2027-28.
Industrial Strategy
- £975 mln for the aerospace sector over 5 years.
- £2 bln over 5 years to support the automotive sector including the zero emissions vehicle manufacturing sector and supply chain.
- Up to £520 mln for a new Life Sciences Innovative Manufacturing Fund.
- Funding to establish an Industrial Strategy Advisory Council that will provide expert advice to government on industrial strategy.
- The Government Chief Scientific Adviser and the National Technology Adviser to lead a review on barriers to the adoption of transformative technologies that could enhance innovation and productivity.
- Of the £56.9 bln defence budget in 2024-25, around £25 bln will be spent on UK industry, supporting advanced manufacturing in aircraft, radars, submarines, and other key industrial capabilities.
Energy intensive industries
- A new deal with Tata Steel, including £500 mln in grant support.
- £350 mln of funding across 2024-25 and 2025-26 for energy intensive industries to support energy efficiency, decarbonisation, and technological innovation.
Critical minerals
- UK Export Finance (UKEF) will be able to provide financial support to companies supplying critical minerals to UK exporters in high-growth sectors such as EV battery production, clean growth, aerospace, and defence.
R&D
- £20.4 bln allocated in 2025-26.
- £25 mln in 2025-26 to launch a new multi-year R&D Missions Programme.
- £40 mln over 5 years for spin-outs proof-of-concept funding.
- Support in 2025-26 for UK fusion energy research.
- A commitment to set 10-year budgets for key R&D activities as part of Phase 2 of the Spending Review.
Buildings & infrastructure
- Investment in remediation will rise to over £1 bln in 2025-26 in response to the Grenfell Tower fire.
- Initial £3.4 bln towards heat decarbonisation and household energy efficiency over the next three years.
- Providing funding to grow the heat pump manufacturing supply chains in the UK.
Transport
- Investing over £200 mln in 2025-26 to accelerate EV chargepoint rollout, including funding to support local authorities to install on-street chargepoints across England.
- Providing £120 mln in 2025-26 to support the purchase of new electric vans via the plug-in vehicle grant and to support the manufacture of wheelchair accessible EVs.
- Maintaining tax incentives to purchase electric cars through Vehicle Excise Duty First Year Rates and the Company Car Tax regimes, as well as by extending 100% First Year Allowances for electric cars and chargepoints for a further year.
- Extend the aviation Advanced Fuels Fund.
- For 2026-27, the government will increase rates of Air Passenger Duty with a rise of 50% for the higher rate which applies to larger private jets.
- Continuation of the freeze on fuel duty.
- Extending the bus fare cap, raising it to £3.
Packaging
- Plastic Packaging Tax (PPT) will increase in line with the Consumer Price Index (CPI). The new rate of PPT will be £223.69 per tonne and will apply to plastic packaging containing less than 30% recycled plastic that is manufactured and imported into the UK from 1 April 2025.
- Businesses will be permitted to use a mass balance approach to evidence recycled content in chemically recycled plastic for PPT.
- Commitment to an in-year top up for 2025-2026 if local authorities do not receive Extended Producer Responsibility for packaging income in line with the central estimate of £1.1bln funding.
Small businesses
- £1 bln across 2024-25 and 2025-26 for the British Business Bank to enhance access to finance for small businesses.
- £200 mln for wider small business support.
- Funding for the Made Smarter Adoption programme to double to £16 mln in 2025-26, supporting small manufacturing businesses to adopt advanced digital technologies and enabling the programme to be expanded to all nine English regions.
Skills & education
- Supporting recruitment of 6,500 new teachers in England, through increases to the core schools budget of £2.3 bln.
- An additional £300 mln for further education.
- £40 bln investment to transform the Apprenticeship Levy into a Growth and Skills Levy.
Also published alongside Autumn Budget 2024:
- Terms of reference for the review of technology adoption
- Response to consultation on the introduction of a UK carbon border adjustment mechanism
- Plastic packaging tax - chemical recycling and adoption of a mass balance approach
- Assessing Effects of Scope 3 Emissions from Offshore Oil and Gas Projects
